THE CAPITAL REINVESTMENT ACT

A Bill to Eliminate Capital Gains Tax on Domestic Reinvestment, Expand National Productive Capacity, and Strengthen Canada’s Sovereign Industrial Base

PREAMBLE

Whereas Canada’s long‑term prosperity and sovereignty require the expansion of domestic productive capacity;

Whereas capital flight, low reinvestment rates, and fragmented tax incentives have historically weakened Canada’s industrial competitiveness;

Whereas the national interest requires a tax system that rewards reinvestment in Canadian infrastructure, manufacturing, energy systems, and strategic industries;

Whereas the Parliament of Canada recognizes the need to mobilize private capital alongside public investment to build national corridors, pipelines, SMRs, Arctic infrastructure, and value‑added industries;

Whereas the elimination of capital gains tax on reinvestment will strengthen domestic ownership, accelerate industrial development, and expand the national tax base;

Now, therefore, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

PART I — SHORT TITLE

1. Short Title
   This Act may be cited as the Capital Reinvestment Act.

PART II — INTERPRETATION

1. Definitions
   In this Act:
   (a) “Eligible Reinvestment” means any reinvestment made in accordance with Part III.
   (b) “Capital Asset” means any asset subject to capital gains taxation under the Income Tax Act.
   (c) “Reinvestment Window” means the period defined under section 7.
   (d) “Strategic Sector” means a sector designated under section 5.
   (e) “Corridor Authority” means an authority established under the Canada 2100 Operating Charter Act.
   (f) “Indigenous Co‑Governance Body” means a body constituted under the Canada 2100 Operating Charter Act.

PART III — ELIGIBLE REINVESTMENT

1. Capital Gains Tax Exemption
   (1) No capital gains tax shall be payable on the disposition of a Capital Asset where the proceeds are reinvested in an Eligible Reinvestment.
   (2) The exemption applies regardless of the size, nature, or duration of the original asset.
2. Eligible Reinvestment Categories
   Eligible Reinvestment includes:
   (a) pipelines and pipeline‑related infrastructure;
   (b) small modular reactors (SMRs) and nuclear supply chains;
   (c) manufacturing facilities, including advanced manufacturing;
   (d) corridor infrastructure, including rail, ports, transmission, and logistics;
   (e) Arctic infrastructure, including hubs, ports, and defence assets;
   (f) petrochemical and refining facilities;
   (g) battery, mineral processing, and critical minerals industries;
   (h) agricultural and food security infrastructure;
   (i) Indigenous‑owned or co‑owned enterprises in strategic sectors.
3. Designation of Strategic Sectors
   (1) The Governor in Council may, by regulation, designate additional sectors as Strategic Sectors.
   (2) Designations must be consistent with national sovereignty, industrial capacity, or corridor development.

PART IV — REINVESTMENT REQUIREMENTS

3. Reinvestment Threshold
   (1) To qualify for exemption, at least 90 percent of the proceeds from the disposition of a Capital Asset must be reinvested in an Eligible Reinvestment.
   (2) The remaining 10 percent may be retained without penalty.
4. Reinvestment Window
   (1) Eligible Reinvestment must occur within 10 years of the disposition of the Capital Asset.
   (2) Partial reinvestments may occur at any time within the window.
5. Verification
   (1) Taxpayers shall provide documentation demonstrating compliance with reinvestment requirements.
   (2) Corridor Authorities may verify reinvestments related to corridor infrastructure.

PART V — INDIGENOUS PARTICIPATION

3. Indigenous Equity Incentives
   (1) Reinvestments that include Indigenous equity participation shall receive priority processing and additional tax incentives.
   (2) The Minister may establish enhanced incentives for Indigenous‑owned enterprises.
4. Co‑Governance
   Eligible Reinvestment projects shall incorporate Indigenous co‑governance where required under the Canada 2100 Operating Charter Act.

PART VI — NATIONAL INDUSTRIAL MOBILIZATION

3. Domestic Ownership Incentives
   (1) Canadian‑controlled private corporations shall receive enhanced reinvestment credits.
   (2) Foreign‑controlled corporations may qualify if reinvestment expands Canadian productive capacity.
4. Corridor Integration
   (1) Reinvestments in corridor infrastructure shall be coordinated with Corridor Authorities.
   (2) Corridor Authorities may issue binding directives to ensure alignment with national plans.
5. Arctic Integration
   Reinvestments in Arctic infrastructure shall be coordinated with the Arctic Corridor Authority and Indigenous Co‑Governance Bodies.

PART VII — ENFORCEMENT AND COMPLIANCE

3. Non‑Compliance
   (1) Failure to reinvest within the Reinvestment Window shall result in the full capital gains tax becoming payable.
   (2) Interest and penalties may apply.
4. Audit Powers
   The Minister may audit any reinvestment claim to ensure compliance.

PART VIII — GENERAL

3. Supremacy Clause
   This Act prevails over any inconsistent provision of the Income Tax Act or any other federal or provincial law.
4. Regulations
   The Governor in Council may make regulations necessary to carry out the purposes of this Act.
5. Coming Into Force
   This Act comes into force on the day it receives Royal Assent.